PROMOTION OF SMALL AND MEDIUM SCALE ENTERPRISES IN THE DEVELOPMENT OF OKEHI LOCAL GOVERNMENT AREA, KOGI STATE

PROMOTION OF SMALL AND MEDIUM SCALE ENTERPRISES IN THE DEVELOPMENT OF OKEHI LOCAL GOVERNMENT AREA, KOGI STATE

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ABSTRACT

This study “Promotion of Small and Medium Enterprises (SMEs) in the development of Okehi LGA, Kogi State was undertaken to find out the extent to which the SME sub-sector in Kogi State has performed its critical role of driving the country’s industrial transformation and development as it has done in some states in Nigeria and also to identify what impedes its development so as to proffer remedial measures. The study examined the performance of the Small and Medium Enterprises (SMEs) sub-sector of the Nigeria Economy, poverty reduction in the rural community in order to play the crucial role it is expected to play.  A total of 55 SMEs were randomly selected from a cross section of a population of 60 SMEs spread among local government areas of Kogi State covering virtually all forms (Sole Proprietorship, Partnership, Private Limited Company etc and kind of services manufacturing, processing, educational etc) of business were part of the study. Through a simple random sampling process four banks, a microfinance bank inclusive were selected for the study.  Two sets of questionnaires were constructed for the SMEs and Banks and administered on the participants. The responses to the questionnaires were complemented with the personal interviews of the key operators by the researcher.  The responses of the participants were analyses using statistical package for social science (SPSS) which generated frequency distribution, means, variances, correlations, analysis of variance etc of the responses. The main hypothesis of this research were tested at 0.5 level of significance using chi-square statistics with a view to identifying the level of entrepreneurship development occasioned by the promotional effort of government and other organizations in Kogi State. The challenges faced by the SMEs and the relationship between the form and nature of the business enterprise and its sources of funding for its operations in the state are also statistically and hypothetically identified, poverty reduction, employment creation among others.

CHAPTER ONE

INTRODUCTION

1.1        BACKGROUND OF THE STUDY

The main strategy for the establishment by the entrepreneurs of Small and Medium Enterprises (SMEs) and its promotion by various sectors, is to enhance job creation, promote economic growth, reduce poverty.  The importance of Small and Medium Enterprises (SMEs) in any economy cannot by overemphasis.  They constitute the smallest unit of business.  They predominate in most sectors of the economy occupying every available space such as form enterprises in the rural areas, provision store, bakery, pure water production, garri processing or food processing industries.

Although, many writers have talked about the financing of the Small and Medium Enterprises in pre-consolidation and post-consolidation periods of Banks towards the enterprises development, the issue of credit accessibility and affordability as it affects economic development has not been stressed.  The concern of this research is to examine the extent of promotion accorded the entrepreneurs of Small and Medium Enterprises. (SMEs) and the level of economic development in the rural communities.

The history of industrial revolution in developed and developing economies or countries has shown that Small and Medium Enterprises (SMEs) are driving force of industrial development.  It is therefore, the attention of the government, the world over to focus on the funding and supporting of Small and Medium Enterprises (SMEs) activities.  Available evidence shows that Small and Medium Enterprises (SMEs) are characterized by being managed by their owners as proprietorship or partnership.  They are largely local in the areas of capital and relatively small size with the industry.

Small and Medium Enterprises (SMEs) predominate in the private sector of the Nigeria economy.  Almost all of them are starved of funds.  The relative importance of the enterprises differs from one type of business to another.  The major areas of business enterprises activities are in manufacturing, rendering services and product distribution.

Banbeck (1983) included in his publication on “Basic Small Business Management” that more than one-third of all the manufacturing firms in Nigeria employ fewer than five persons or none at all and that close to two-thirds employ fewer than twenty workers.  His study on the whole revealed that five per cent of non-form business of all kinds employs fewer than fifty workers each.

The characteristics of Small and Medium Enterprises (SMEs) largely constitute the basis of their problems and special needs that have attracted different authorities and sectors in recent past.  It is also the focus of this research to critically examine and measure the effects of the government funding programmes on Small and Medium Enterprises (SMEs) activities.  Though the result of the findings from the respondents/enterprises, the study will determine how much of the support have been received from the programmes and extent of development experienced in the population Okehi LGA. Kogi State.

The study is further intended to reveal the various enterprises with Okehi communities with a view to identifying their business activities, proffering solutions to the identified challenges impeding their effectiveness and proficiency to achieve economic development.

1.2        STATEMENT OF THE PROBLEM

The research examines in all possible ways, the extent of government funding programmes in the promotion of Small and Medium Enterprises (SMEs) in the population area as well as the impact on the socio-economic development of the area covered by the scope.  The study further identifies the peculiar problems or challenges the SME sub-sector associated with their smooth operations.  Possible suggestions to provide engine for economic growth and prosperity in the industries is also the focus of this study.

The research tend to ask and find answers to such guiding questions as

-              To what extent do the entrepreneurs have access to credit loan and guarantees?

-              How often have the industrialist received training and information services for the promotion and development of the Small and Medium Enterprises (SMEs)?

-              How long have the management of the Small and Medium Enterprises (SMEs) been enjoying credit facilities from Bank and government aid, what benefits evidenced in their enterprises?

-              Enumerate the limiting factors inhibiting the development of the Small and Medium Enterprises (SMEs) in Okehi Communities.

Finally, the research is carried out to uncover the administrative and technical weakness of government and other funding agencies in the efficient and effective implementation of their policies and strategies.  That is, do the government and other funding establishments actually realize their goals aimed at promoting and developing Small and Medium Enterprises (SMEs).

1.3        OBJECTIVES OF THE STUDY

The broad and primary objective of this research is to find out the extent to which the SMEs funding programmes as promotion strategy have impacted on the development of enterprises in the rural communities.  This is further to identifying the all inclusive measurable performance of the enterprises and to proffer possible solution to the challenges posed by SMEs programmes implementation strategies.

To realistically achieve this basic objective, this study will also identify other secondary objectives.  This aids the researcher to articulate the enterprises direction as regards where is the enterprise now, what does it want to be and how does it want to get there.

These secondary objectives includes:

1.   To identify the viability or otherwise of government funding programmes on SMEs.

2.   To compare the standards (set objectives) of funding institutions with the a SMEs actual performance.

3.   To identify the perception of the entrepreneurs or industrialists or SMEs operator and realistic on the implementation of the government funding programmes as the affect SMEs development.

4.   To determine the socio-economic impact of the SMEs on the people in the study area.

5.   To investigate the factors militating against meaningful development of small and medium scale enterprises in the local government area.

6.   To identify other investment opportunities available to the entrepreneurs.

7.   To recommend based on the findings from the research study ,possible measures to minimize the challenges facing the practice of SMEs in the rural communities.

1.4    SIGNIFICANCE OF THE STUDY

The promotion of Small and Medium Enterprises (SMEs) by the funding institutions is geared towards improving the living standards of especially the rural dwellers in the country.  The research signifies the following:

1.           The research pinpoints the unique role of the funding institution in empowering the entrepreneurs/industrialists.  If the purpose of SMEs must be achieved the entrepreneurs must be supported with adequate capital in form of credit, loan and guarantees, grants etc.

2.           The study also uncovers the correlation between the quantum of funds made available to the entrepreneurs and their level of performance in the business activities.  This compares in a measurable for the standards (set objectives) and actual performance.

3.           The constraints and limitations which affect the success of the operators of SMEs are uncovered by this study.  The research report will acquaint the industrialist and other stakeholder of the SMEs with some far reaching measures or suggestions towards realistic entrepreneurship development.

4.           The study further identifies other possible way or available opportunities of diversifying their investments.

5.           The research report/recommendation serves as a reference point to potential investors in SMEs.  The study widens the business horizons of the entrepreneurs or operators of SMEs.

1.5        RESEARCH QUESTION/HYPOTHESIS


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